Spending Car Allowance

Rusty_Russ

I’ve recently been offered a new job at a different company at £30k p/a plus a £400 p/m allowance for a car.

My current role is the same salary of £30k p/a but with a company car (or my company calls it a - jobs need car) (which includes a fuel card, as I require both to undertake the role). And works out at £5293 as the value of the benefit.

My new role won’t require me to use a car for business use as my travel will be to London via train which will be covered by the company. My car allowance was thrown in as it was important for me to still have use of a vehicle (me and my wife both used the company car for personal use). I understand the company not offering me a company car given the fact they’ll be paying for my train travel already, and a car for business use won’t be nessasary.

What I’d like to know is firstly how to I spend the allowance? Am
I after a PCP or PCH plan?

Do I go into a dealership and tell them it’s a car allowance?

I’ve financed a personal car before but was a long time ago. Would I need my own deposit on a vehicle? Etc

I understand how my tax is calculated for my company car, but what changes with an allowance and how do I calculate any tax implications?

A lot of the forums talk about people having the option of either company car or car allowance for cost effectiveness, I don’t have that option and will be returning my company car for my currently company when I leave so will be taking this car allowance regardless, and hope I am not worse off financially than my current role! (If someone can advise on that point too that would be great )

Thanks

Car_54

Whatever you do, don't tell a dealer you have a car allowance. They will take it as a minimum and won't offer you anything costing less.


So far as tax is concerned, it's simply part of your salary.

foxy-stoat

You dont need a new car - your take home will be around £300 a month so get a loan for 36 months and monthly payments of £175 or sell. You will be able to finance and run a reasonable car for that.

Lucky_Duck_2

Those numbers don't appear to allow for paying less tax through not having a company car any more..

DoaM

foxy-stoat wrote: »

so get a loan for 36 years

:eek:
.

Car_54

Lucky_Duck wrote: »

Those numbers don't appear to allow for paying less tax through not having a company car any more..

The OP's BIK figure for the company car is £5,293 compared to £4,800 car allowance. That's worth about £33 a month if he pays tax at 20%.

getmore4less

You need to work out your net improvement in take home, don't forget BIK on the train travel.

Then try to run a car on that.

Lucky_Duck_2

Car_54 wrote: »

The OP's BIK figure for the company car is £5,293 compared to £4,800 car allowance. That's worth about £33 a month if he pays tax at 20%.

So the net difference in take home will be nearer £400 per month

Car_54

Lucky_Duck wrote: »

So the net difference in take home will be nearer £400 per month

I make it £353.

Rusty_Russ

Thanks all for replies so far. Reading this I should be better off then?

Any advice of purchasing a vehicle using the allowance?

Car_54

Rusty_Russ wrote: »

Thanks all for replies so far. Reading this I should be better off then?

Any advice of purchasing a vehicle using the allowance?

You're not better off! You've got more money, but you've lost a car with free fuel, insurance, maintenance, tyres, etc.
To be better off, you need to find a car which will cost you less than your net car allowance, including all expenses.
I'd be inclined to purchase outright with a bank loan. £250 a month may get you a loan of about £8,000 over 3 years, depending on your credit rating. That could buy you a decent car, and leave £100 a month for insurance etc.
Others will have different advice!